AIG To Shed Transatlantic Stake

American International Group
will sell off its remaining stake in
Transatlantic Holdings
, as the insurer continues to make progress in repaying U.S. taxpayers.

AIG
currently holds a 14% stake in the casualty reinsurer under its American Home Assurance Co. subsidiary, which the company will sell in a public offering of 9.2 million shares. The offering is expected to begin on March 9, simultaneous with the addition of Transatlantic to the S&P Midcap 400 Index. A portion of the shares will be held back for purchase by index funds.

The announcement comes shortly after AIG reported the sale of its Asian life insurance business American International Assurance to U.K.-based
Prudential
for $25 billion in cash and $10.5 billion in securities and new shares. (See "Calmer Seas Buoy AIG.")

As of its fourth quarter earnings report filed on Feb. 26, AIG still carried $129.3 billion in government loans from the September 2008 government aid package it received, and the asset sales are designed to help put a dent in that obligation. (See "AIG Awash In Red Ink.")

Talks continue with
MetLife
for the sale of AIG's American Life Insurance Co. unit, known as Alico. If the Internal Revenue Service decides favorably on a tax issue that has hampered the deal, as was reported in the Wall Street Journal, the $15 billion sale will be able to move forward.

Aside from the asset sales, Gimme Credit analyst Kathleen Shanley said that AIG continues to restructure to return to profitability.

"It is working to stabilize its remaining businesses," she said, "and it is unwinding holdings related to its financial products and derivatives trading operations." Still, the insurer has a long way to go before it can repay the government and become profitable.

Investors have responded to the moves though, and shares of AIG gained another 4.9% to $28.01 Friday. Transatlantic shares lost 3.8% to $51.73.